[Federal Register Volume 83, Number 126 (Friday, June 29, 2018)]
[Proposed Rules]
[Pages 30628-30639]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-13699]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 51
[WC Docket No. 18-155; FCC 18-68]
Updating the Intercarrier Compensation Regime To Eliminate Access
Arbitrage
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Commission proposed to adopt rules to
curb the financial incentive to engage in access stimulation by giving
access-stimulating LECs two choices for receiving calls. The access-
stimulating LEC can choose either: To be financially responsible for
the delivery of calls to its network, in which case intermediate access
providers would charge the access-stimulating LEC for the delivery of
calls; or to accept direct connections from long distance carriers
seeking to terminate telephone calls to the LEC or from intermediate
access providers of the long distance carriers' choosing, which would
allow the long distance carriers to bypass intermediate access
providers chosen by the access-stimulating LEC. This document seeks
comment on several alternatives, including requiring LECs engaged in
access stimulation to immediately transition their terminating access
[[Page 30629]]
charges to bill-and-keep. This document also seeks comment on the
effect the proposed rules will have on specific arbitrage schemes
described in the record. Finally, it seeks comment on how to curb other
arbitrage schemes.
DATES: Comments are due on or before July 20, 2018; reply comments are
due on or before August 3, 2018.
ADDRESSES: You may submit comments, identified by WC Docket No. 18-155,
by any of the following methods:
Federal Communications Commission's website: http://apps.fcc.gov/ecfs//. Follow the instructions for submitting comments.
People with Disabilities: Contact the FCC to request
reasonable accommodations (accessible format documents, sign language
interpreters, CART, etc.) by email: [email protected] or phone: 202-418-
0530 or TTY: 888-835-5322.
For detailed instructions for submitting comments and additional
information on the rulemaking process, see the SUPPLEMENTARY
INFORMATION section of this document.
FOR FURTHER INFORMATION CONTACT: Edward Krachmer, FCC Wireline
Competition Bureau, Pricing Policy Division at 202-418-1525, or at
[email protected].
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking (NPRM), WC Docket No. 18-155; FCC 18-68, adopted
on June 4, 2018 and released on June 5, 2018. The full text of this
document may be obtained at the following internet address: https://www.fcc.gov/document/fcc-proposes-reforms-eliminate-intercarrier-compensation-arbitrage.
I. Background
A. The Current Access Stimulation Rules
1. To reduce access stimulation, as part of the USF/ICC
Transformation Order, 76 FR 73860, FCC 11-161, the Commission defined
``access stimulation'' as occurring when two conditions are met. First,
the involved LEC must have a ``revenue sharing agreement,'' which may
be ``express, implied, written or oral'' that ``over the course of the
agreement, would directly or indirectly result in a net payment to the
other party (including affiliates) to the agreement, in which payment''
by the LEC is ``based on the billing or collection of access charges
from interexchange carriers or wireless carriers.'' Second, the LEC
must also meet one of two traffic tests. An access-stimulating LEC
either has ``an interstate terminating-to-originating traffic ratio of
at least 3:1 in a calendar month, has had more than a 100 percent
growth in interstate originating and/or terminating switched access
minutes of use in a month compared to the same month in the preceding
year.'' Even if a LEC no longer meets either of these traffic tests,
once it is considered to have engaged in access stimulation, this
regulatory classification persists so long as the LEC maintains any
revenue sharing agreement.
2. A LEC that is engaged in access stimulation is required by our
rules to reduce its access charges either by adjusting its rates to
account for its high traffic volumes (if a rate-of-return LEC) or to
reduce its access charges to those of the price cap LEC with the lowest
switched access rates in the state (if a competitive LEC). These
reduced rates lower the cost to interexchange carriers (IXCs) and the
amount received by the LEC and the provider of high call volume
services with which it has a revenue sharing agreement.
B. Arbitrage Schemes After the USF/ICC Transformation Order
3. Last year, the Wireline Competition Bureau (Bureau) issued a
public notification, 82 FR 44754, seeking to refresh the record on ICC
issues raised by the Commission in the USF/ICC Transformation Order. In
response to that public notification, commenters argue that,
notwithstanding prior Commission action, arbitrage continues as
``companies engaged in access stimulation use a variety of tactics to
prevent interexchange carriers from avoiding their excessive charges.''
The record indicates that today's access arbitrage schemes are often
enabled by the use of intermediate access providers selected by the
terminating LECs. When an intermediate access provider is in the call
path, the IXC pays access charges on a per-minute-of-use (MOU) basis to
the intermediate access provider and to the terminating LEC. This
tactic evades existing Commission rules intended to stop access
stimulation to the extent that an intermediate access provider is not
captured by the definition of ``access stimulation,'' and thus, is not
subject to those rules.
4. Recent complaint activity suggests that much of the post-USF/ICC
Transformation Order access arbitrage activity specifically involves
LECs that use centralized equal access (CEA) providers to connect to
IXCs. CEA providers are a specialized type of intermediate access
provider that were formed in the 1980s to implement long distance equal
access obligations (permitting end users to use 1+ dialing to reach the
IXC of their choice) and to aggregate traffic for connection between
rural incumbent LECs and other networks, particularly those of IXCs.
There are currently three CEA providers, and the LECs that use them
(subtending LECs) have traditionally been reliant on CEA providers for
this equal access implementation as well as traffic measurement and
billing.
II. Discussion
5. We propose solutions to the persistent, costly, and inefficient
access stimulation arbitrage scheme described here and seek comment on
how to prevent other types of arbitrage. We are mindful of the fact
that practices adjust to regulatory change; therefore we invite comment
on how to avoid introducing incentives for new types of arbitrage to
arise.
A. Requiring Access-Stimulating LECs Either To Be Financially
Responsible for Calls Delivered to Their Networks or To Accept Direct
Connections
6. To rid the ICC system of the inefficiencies caused by access
stimulation relating to intermediate access providers, we propose to
require access-stimulating LECs to choose either to: (i) Bear the
financial responsibility for the delivery of terminating traffic to
their end office, or functional equivalent, or; (ii) accept direct
connections from either the IXC or an intermediate access provider of
the IXC's choice.
7. Revised Financial Responsibility. We seek comment on the first
prong of our proposal and the impact it will have on access stimulation
schemes. Under this prong, an access-stimulating LEC that does not
offer direct connections to IXCs would bear all financial
responsibility for applicable intermediate access provider terminating
charges normally assessed to an IXC (from the point of indirect
interconnection to the access-stimulating LEC's end office or
functional equivalent), and would be prohibited from assessing
transport charges for any portion of transport between the intermediate
access provider and the LEC's end office or functional equivalent that
the LEC, itself, provides. What are the advantages of placing the
financial responsibility for delivery of traffic to its end office, or
functional equivalent, on the access-stimulating LEC? Are there
disadvantages?
8. What implementation issues does this part of our proposal raise?
What steps would intermediate access providers need to take to bill
access-stimulating LECs for terminating access
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and to not bill IXCs? How much time do access-stimulating LECs and
intermediate access providers need to make modifications necessary to
accomplish this proposed change in financial responsibility? We propose
to require carriers to come into compliance with these requirements
within 45 days of the effective date of any revised rule. Is that
timeframe sufficient? For example, is it possible to implement
necessary billing system changes within that time frame? We similarly
propose to require any carriers that newly qualify as access-
stimulating LECs to come into compliance with these requirements within
45 days of such qualification.
9. For purposes of this proposal, we propose to define
``intermediate access provider'' as ``any entity that carries or
processes traffic at any point between the final interexchange carrier
in a call path and the carrier providing end office access service.''
We seek comment on the use of this definition in this context. Does it
adequately capture the types of intermediate access providers currently
benefiting from access stimulation schemes? Is it too narrow or too
broad?
10. Direct Connection. Commenters have argued that the volume of
traffic bound for access-stimulating LECs justifies direct connections,
but allege that access-stimulating LECs currently refuse to accept such
connections. Direct connections do not pass through intermediate
switches and are offered on a capacity basis at monthly-recurring
rates, as opposed to a per-MOU rate. If there is a sufficient volume of
traffic, the monthly charges for direct connections can often be
substantially lower than per-MOU rates for an equivalent amount of
traffic. As the second prong of our proposal, we propose to provide
access-stimulating LECs the option to offer to connect directly to the
IXC or an intermediate access provider of the IXC's choice as an
alternative to bearing financial responsibility for intermediate access
provider charges and ceasing to bill their own transport charges. Under
this proposal, IXCs would have the option of selecting an intermediate
access provider that would bill the IXC for transport to the access-
stimulating LEC on a dedicated basis. We seek comment on this proposal
and on how best to implement it. We note that as a result of this
election, an IXC would have the choice to connect with an access-
stimulating LEC directly or indirectly through the LEC's existing
intermediate access provider or another IXC directly connecting to the
access-stimulating LEC.
[GRAPHIC] [TIFF OMITTED] TP29JN18.009
11. For direct connections between an IXC (or an intermediate
access provider of the IXC's choosing) and an access-stimulating LEC to
be established, not only must the access-stimulating LEC be willing and
able to accept direct connections, but arrangements need to be made
between the IXCs seeking to avail themselves of such connections and
the LEC. If we adopt the approach we propose today, how long should we
give existing access-stimulating LECs to indicate their willingness to
accept direct connections and how long should we give them to implement
those direct connections? How detailed a timeline should we adopt for
this process? Should we adopt rules regarding the
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conduct of any negotiations for direct connections? For example, should
we adopt a timeframe within which negotiations must be concluded before
the LEC must assume financial responsibility for the delivery of
traffic or the impasse submitted to arbitration? Similarly, if, at some
later date, an access-stimulating LEC decides to offer direct
connections, what process should the access-stimulating LEC need to
follow to cease bearing the financial obligation for the intermediate
access providers' charges? How should we address LECs that meet the
definition of access-stimulating LEC after adoption of our rules? If
they chose to offer direct connections, what time frame should we
provide for making and implementing that decision?
12. We propose to adopt a rule that makes clear that allowing
access-stimulating LECs to accept direct connection as a means of not
bearing financial responsibility for intermediate access provider
charges does not carry with it an obligation for such LECs to extend
their networks absent a request and an independent obligation to do so.
Is this a reasonable limitation? Are there any other limitations or
exceptions we should apply? Are there other rules we should adopt to
help providers implement the option to accept direct connections if a
provider makes that choice? For example, because IXCs are not currently
directly connected to access-stimulating LECs in the scenario to which
our proposal applies, a third-party vendor may need to connect the two
networks via dedicated transport such as, perhaps, the current
intermediate access provider. Are there any rules that we should adopt
to facilitate such arrangements?
13. One result of permitting access-stimulating LECs that subtend
CEA providers to connect with IXCs directly (or an intermediate access
provider of an IXC's choice) would be to end the ``mandatory use''
policy applicable to some CEA providers, at least with respect to
access-stimulating LECs. Historically, this mandatory use policy has
permitted the CEA providers in Iowa and South Dakota to require IXCs to
connect to LECs that subtend the CEA provider indirectly through the
CEA provider's tandem switch rather than indirectly through another
intermediate access provider or directly to the subtending LEC. In
initially permitting this practice almost thirty years ago, the
Commission concluded that it ``[did] not believe that the mandatory
termination requirement for interstate traffic is unreasonable or
differs substantially from the normal way access is provided, as both
an originating and terminating service by the local exchange company.''
14. It appears that access stimulation, particularly when practiced
by competitive LECs, which were formed well after CEA providers were
established, presents a reasonable circumstance for departing from the
policy of permitting mandatory use requirements because delivery of
such traffic, particularly in the pertinent volumes, was not the
purpose for which CEA providers were formed. We seek comment on this
assumption, and on the impact of this proposal on CEA providers, on the
LECs that subtend CEA providers, and on the customers of such
subtending LECs. For example, to the extent that creating the
opportunity for access-stimulation traffic to bypass CEA providers
threatens the viability of CEA providers, we seek comment on whether
and how this potential effect should be addressed. Are there other
companies that can perform the traditional functions of CEA providers,
including equal access implementation and traffic measurement and
billing? Recognizing that most states do not have CEA providers, are
there ways that equal access and traffic identification and measurement
are handled by small LECs in those states that can inform our decision
making in this proceeding?
15. Notice Requirement. We propose to require access-stimulating
LECs to notify affected IXCs and intermediate access providers of their
intent to accept financial responsibility for calls delivered to their
networks or to accept direct connections from IXCs or intermediate
access providers of the IXCs' choosing. Should we also require the
access-stimulating LEC to provide public, written notice of its choice
to the Commission? Should we provide specific requirements regarding
the form and content of such notice? For example, should we require an
access-stimulating LEC to accept direct connections at current points
of interconnection (POI) with intermediate access providers, as well as
at the LECs' end office, and to provide notice of those locations? Or,
should we allow an access-stimulating LEC to choose where to provide
POIs and to specify those locations in its notice? Should access-
stimulating LECs also provide notice to the Commission and state
commissions of their choice to accept direct connections and of the
location of their POIs? To ensure that the investment made by an IXC to
extend its network to directly interconnect with an access-stimulating
LEC is not stranded, should an access-stimulating LEC be prohibited
from ending its election of direct connections once made? Should such a
prohibition be permanent or for a specified period of time?
16. Impact of this Proposal. We seek comment on the costs and
benefits of our proposal. To what extent will our two-pronged proposal
alleviate market distortions created by the ability of access-
stimulating LECs to bill for switched transport services at rates that
our rules have not required to be reduced below 2011 interstate levels?
Will the incentives created by our proposal for access-stimulating LECs
to accept direct connections (to avoid bearing intermediate access
provider charges imposed by a provider of the access-stimulating LEC's
choosing) alleviate the problem of IXCs paying relatively-high tandem-
switched transport rates by giving IXCs more options to reach end
users?
17. How will our proposal affect incentives for carriers to migrate
their services to IP? To what extent do parties expect that direct
connections would be provided in time division multiplexed (TDM) format
rather than IP? Are there circumstances under which an access-
stimulating LEC should be required, upon request, to interconnect using
IP rather than TDM and bear any costs necessary to do so? Are calls
bound for high call volume service providers ultimately converted to IP
for delivery? Would requiring IP interconnection obviate the need to
convert TDM traffic to IP for delivery?
18. NTCA et al. Proposal. NTCA et al. has recommended that we adopt
rules similar to the first prong of our proposal, but without providing
an access-stimulating LEC the option of electing to accept direct
connections as a means of avoiding bearing intermediate access provider
charges. Under the NTCA et al. proposal, within 45 days of the
effective date of the implementing rules, access-stimulating LECs would
be required to revise their tariffs to remove any terminating
interstate tandem switching and tandem transport charges of their own
and also begin to assume financial responsibility for all intermediate
switched access provider interstate tandem switching and transport
charges for traffic bound for such access-stimulating LECs. The NTCA et
al. proposal would also require access-stimulating LECs to provide
written notice to all affected providers, including intermediate access
providers, of the substance of these tariff revisions at the time that
such tariff revisions are filed, as well as the fact that such access-
stimulating LECs will be bearing financial responsibility for pertinent
intermediate switched access provider interstate tandem switching and
transport charges.
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19. Although the NTCA et al. proposal does not preclude an access-
stimulating LEC from avoiding incurring intermediate access provider
charges by beginning to accept direct connections, it also does not
provide IXCs any incentive to accept offers of direct connection from
such LECs. By permitting access-stimulating LECs to elect to accept
direct connections, our proposal seeks to provide a formal means by
which access-stimulating LECs may eventually avoid incurring
intermediate access provider charges. We seek comment on the NTCA et
al. proposal both as an independent proposal and also as it relates to
our proposal above.
20. CenturyLink Proposal. CenturyLink suggests that we consider an
approach similar to our proposal, but with broader applicability.
Rather than focusing on access-stimulating LECs, CenturyLink recommends
shifting financial responsibility to any LEC that declines to accept a
request for direct interconnection for the purpose of terminating
access traffic. We seek comment on this recommendation. What would be
the impact of such an approach on the affected companies and their
customers?
B. Requiring All Access-Stimulating LECs To Transition to Bill-and-Keep
21. If we do not adopt rules requiring access-stimulating LECs to
either choose to accept financial responsibility for the delivery of
calls or to accept direct connections, should we reduce all terminating
tandem switching, common transport, and tandem-switched transport rate
elements for access stimulators to bill-and-keep? Moving these access
charges to bill-and-keep would be consistent with our overarching goals
of discouraging arbitrage, in particular access stimulation, and
ultimately transitioning all traffic to bill-and-keep. It would also be
consistent with the Commission's finding in the USF/ICC Transformation
Order that with respect to terminating traffic, the LEC's end user is
the cost causer and therefore the LEC should look first to its
subscribers to recover the costs of it network. To what extent would
this approach resolve the access arbitrage concerns identified in this
NPRM? We also seek comment on how this approach fits with the other
proposals in this NPRM. For example, if we reduce all terminating
access charges to bill-and-keep is there any remaining incentive for
carriers to stimulate traffic? We also seek comment on any
implementation issues or concerns related to the proposal. Should we
provide for a transition period to bill-and-keep for access
stimulators? If so, how long should the transition last and what steps
should it include?
22. We also seek comment on whether to require an access-
stimulating LEC to transition its dedicated transport and originating
rates to bill-and-keep. The only potential access arbitrage scheme of
which we are aware regarding originating access concerns 8YY traffic,
which we leave for separate consideration. Outside the 8YY context, are
there arbitrage schemes involving originating access about which we
should be concerned? Can they be addressed by a transition to bill-and-
keep or by other proposals in this NPRM?
C. Defining Access Stimulation
23. Given evidence that access stimulation schemes are still being
perpetrated notwithstanding our existing rules, we seek comment on
whether, and if so how, to revise the current definition of access
stimulation to more accurately and effectively target harmful access
stimulation practices. What has been the impact of the current
definition over the last seven years? Has it proved effective at
identifying actors that are distorting the ICC system for their own
gain? If not, how can we revise the definition to more accurately
identify these types of harmful practices? Should we, for example,
modify the ratios or triggers in the definition? If so, how should
those ratios or triggers be modified? Should we adopt triggers that
relate to the stimulation of tandem and transport services? If so, what
should those triggers be? Is the current revenue sharing agreement
requirement in our rules sufficiently broad or should it be revised,
and if so how? Or, should we remove the revenue sharing portion of the
definition, because access stimulation seems to be occurring in some
instances even in the absence of revenue sharing? Do commenters believe
that revenue sharing alone is an indication of access stimulation? If
so, should we revise our rules so that the existence of a revenue
sharing agreement triggers the access stimulation rule? How will we
know if parties are engaged in revenue sharing? Should we require these
parties to self-report? If so, we seek comment on how to implement a
self-reporting requirement.
24. Alternatively, based on parties' experience with our existing
access stimulation rules, is there reason to find that access
stimulation itself is unjust and unreasonable because of the imposition
of excess charges on IXCs, wireless carriers, and their customers? Or,
is there a subset of such activities that we should separately identify
as unlawful?
25. To address specific concerns identified in the record,
commenters should also consider the extent to which the access
stimulation definition should be revised to address intermediate access
providers. Do intermediate access providers that are not engaged in
access stimulation as defined in our current rules nevertheless benefit
from access stimulation schemes? To remove incentives for intermediate
access providers to enable access arbitrage schemes, aside from the
proposals discussed above, should we adopt new access stimulation
rules, or modify our existing rules, to apply specifically to
intermediate access providers? Would doing so be unduly burdensome to
intermediate access providers or small LECs who subtend them? Are there
technical obstacles that would make it infeasible for intermediate
access providers to comply with the Commission's current, or any
modified, access stimulation rules? Would a requirement that access-
stimulating subtending LECs notify the intermediate access provider
that they are engaged in access stimulation and identify the traffic
that is being stimulated provide a practical solution?
D. Addressing Other Arbitrage Schemes, and Alternative Approaches to
Arbitrage
26. The record indicates the existence of at least three other
types of arbitrage schemes. We seek comment on the prevalence and
impact of these types of schemes described in more detail below. Will
any of the rules we propose today help retard these schemes? Are there
other rules we should adopt to prevent these schemes?
27. First, parties describe an access arbitrage scheme involving a
revenue sharing or other type of agreement between an intermediate
access provider and a terminating carrier that may not meet the
definition of access stimulation under our rules, such as a Commercial
Mobile Radio Service (CMRS) carrier. CMRS carriers are prohibited from
tariffing access charges. However, intermediate access providers that
transport traffic from an IXC to CMRS carriers can charge for access
services through filed tariffs or negotiated agreements. Some IXCs
claim that certain CMRS carriers that previously offered direct
connections between their networks and the IXCs' networks have begun to
use intermediate access providers to terminate their traffic from IXCs,
to reap the benefit of alleged revenue sharing
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agreements with the intermediate access providers. Should we adopt
rules that discourage all revenue sharing agreements between
terminating providers and intermediate access providers? If a
terminating provider requires that some or all traffic be routed
through an intermediate access provider, should we require the
terminating provider to pay the intermediate access provider's charges?
Or are there instances where it is most efficient or beneficial in
other ways for a carrier to require traffic be routed through an
intermediate access provider? What would be the costs and benefits of
requiring a terminating provider that requires the use of a specific
intermediate access provider to pay the intermediate access provider's
charges? And would the cost-benefit analysis change if we focused any
such rules on large terminating providers--i.e., those with 100,000 or
more ``lines'' at the holding company level?
28. Second, because LECs and intermediate access providers receive
greater compensation from IXCs the further the LEC or intermediate
access provider carries the traffic to reach a POI with the IXC, some
commenters allege that LECs have changed their POI with IXCs for the
sole purpose of artificially inflating their per-MOU, per-mile
transport rates and revenue. This scheme is often referred to as
mileage pumping. Shortly after the USF/ICC Transformation Order, the
Commission released an order addressing this practice finding such
network changes were merely sham arrangements and that the LECs did not
have the unilateral right under their tariffs to make such changes.
Nevertheless, allegations of mileage pumping continue. We seek comment
on the prevalence of this practice, its impact in the market, and the
likely effect of the rules proposed in this NPRM on this concern. What
more can we do to prevent these practices?
29. Third, some commenters raise concerns about the addition of
superfluous network facilities for which the LEC can bill switched
access charges, but the rates for which are not subject to the current
transition to bill-and-keep. This practice is sometimes referred to as
``daisy chaining.'' This practice may inefficiently inflate per-mile
charges and insert unnecessary facilities to justify assessment of
additional rate elements, such as remote switches that subtend end
offices. What actions can we take to prevent daisy chaining?
30. Would the CenturyLink suggestion of shifting financial
responsibility to LECs that decline to accept direct connections
eliminate or reduce the three types of inefficient routing schemes
described above? Even if an IXC chose not to seek a direct connection,
would the risk of IXCs seeking direct connections provide a
disciplining counterweight to some providers' incentives to engage in
mileage pumping or daisy-chaining? What would be the impact on affected
parties?
E. Other Issues
31. We recognize that any action we take to address access
arbitrage may affect the costs to carriers and their customers and the
choices they make, as they provide and receive telecommunications
services. Consumers that enjoy high call volume services could be
affected by regulatory adjustments targeting arbitrage. Are there
efficiencies that are in the public's interest in what some describe as
arbitrage? Would addressing the arbitrage described here unfairly
advantage any particular competitor or class of competitors? If so, are
there alternative means to address the arbitrage issues described here
and presented in the record? How would the changes proposed herein
affect small businesses?
32. In the USF/ICC Transformation Order, the Commission considered
direct costs imposed on consumers by arbitrage schemes. The Commission
also found that access stimulation diverts ``capital away from more
productive uses such as broadband deployment.'' We believe this
continues to be true. Are there additional, more-current data available
to estimate the annual cost of arbitrage schemes to companies, long
distance rate payers, and consumers in general? Likewise, are there
data available to quantify the resources being diverted from
infrastructure investment because of arbitrage schemes? To what degree
are consumers indirectly affected by potentially inefficient networking
and cost recovery due to current regulations and the exploitation of
those regulations? Are there other costs or benefits we should
consider?
F. Legal Authority
33. The proposals in this NPRM, targeted to address the particular
issues described in the record, continue the work the Commission began
in the USF/ICC Transformation Order to stop economically wasteful
arbitrage activity and the damage it causes in telecommunications
markets. Therefore, we rely on the legal authority the Commission set
forth in the USF/ICC Transformation Order, as support for modifications
to rules we propose in this NPRM. The Commission made clear that its
rules to address access arbitrage would result in interstate access
rates ``consistent with section 201(b) of the Act.'' The Commission
likewise found that ``[o]ur statutory authority to implement bill-and-
keep as the default framework for the exchange of traffic with LECs
flows directly from sections 251(b)(5) and 201(b) of the Act.'' We seek
comment on whether additional statutory authority is available, or
necessary, to support the actions proposed here.
III. Rule Revisions
34. We seek comment on the rule changes proposed at the end of this
document. What, if any, other rule additions or modifications should we
make to codify these proposals? Are there any conforming rule changes
that commenters consider necessary? For example, we intend for any
rules that we adopt to apply not only to interstate traffic, but also
intrastate traffic. Do our proposed rules adequately address this? Are
there any conflicts or inconsistencies between existing rules and those
proposed herein? We ask commenters to provide any other proposed
actions and rule additions or modifications we should consider to
address the access arbitrage schemes described in this NPRM including
updates to any relevant comments or proposals made in response to the
USF/ICC Transformation FNPRM, 76 FR 78383.
IV. Procedural Matters
35. Filing Instructions. Pursuant to Sec. Sec. 1.415 and 1.419 of
the Commission's rules, 47 CFR 1.415, 1.419, interested parties may
file comments and reply comments on or before the dates indicated on
the first page of this document. Comments may be filed using the
Commission's Electronic Comment Filing System (ECFS). See Electronic
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
Electronic Filers: Comments may be filed electronically using
the internet by accessing the ECFS: https://www.fcc.gov/ecfs/ Paper Filers: Parties who choose to file by paper must file an
original and one copy of each filing. If more than one docket or
rulemaking number appears in the caption of this proceeding, filers
must submit two additional copies for each additional docket or
rulemaking number.
Filings can be sent by hand or messenger delivery, by commercial
overnight courier, or by first-class or overnight U.S. Postal Service
mail. All
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filings must be addressed to the Commission's Secretary, Office of the
Secretary, Federal Communications Commission.
All hand-delivered or messenger-delivered paper filings
for the Commission's Secretary must be delivered to FCC Headquarters at
445 12th St. SW, Room TW-A325, Washington, DC 20554. The filing hours
are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together
with rubber bands or fasteners. Any envelopes and boxes must be
disposed of before entering the building.
Commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9050 Junction Drive,
Annapolis Junction, MD 20701.
U.S. Postal Service first-class, Express, and Priority
mail must be addressed to 445 12th Street SW, Washington, DC 20554.
36. People with Disabilities. To request materials in accessible
formats for people with disabilities (braille, large print, electronic
files, audio format), send an email to [email protected] or call the
Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (tty).
37. Ex Parte Requirements. This proceeding shall be treated as a
``permit-but-disclose'' proceeding in accordance with the Commission's
ex parte rules. Persons making ex parte presentations must file a copy
of any written presentation or a memorandum summarizing any oral
presentation within two business days after the presentation (unless a
different deadline applicable to the Sunshine period applies). Persons
making oral ex parte presentations are reminded that memoranda
summarizing the presentation must: (1) List all persons attending or
otherwise participating in the meeting at which the ex parte
presentation was made; and (2) summarize all data presented and
arguments made during the presentation. If the presentation consisted
in whole or in part of the presentation of data or arguments already
reflected in the presenter's written comments, memoranda, or other
filings in the proceeding, the presenter may provide citations to such
data or arguments in his or her prior comments, memoranda, or other
filings (specifying the relevant page and/or paragraph numbers where
such data or arguments can be found) in lieu of summarizing them in the
memorandum. Documents shown or given to Commission staff during ex
parte meetings are deemed to be written ex parte presentations and must
be filed consistent with Rule 1.1206(b). In proceedings governed by
Rule 1.49(f) or for which the Commission has made available a method of
electronic filing, written ex parte presentations and memoranda
summarizing oral ex parte presentations, and all attachments thereto,
must be filed through the electronic comment filing system available
for that proceeding, and must be filed in their native format (e.g.,
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding
should familiarize themselves with the Commission's ex parte rules.
38. Paperwork Reduction Act Analysis. This document contains
proposed new and modified information collection requirements. The
Commission, as part of its continuing effort to reduce paperwork
burdens, invites the general public and the Office of Management and
Budget to comment on the information collection requirements contained
in this document, as required by the Paperwork Reduction Act of 1995,
Public Law 104-13. In addition, pursuant to the Small Business
Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C.
3506(c)(4), we seek specific comment on how we might further reduce the
information collection burden for small business concerns with fewer
than 25 employees.
39. Initial Regulatory Flexibility Act Analysis. Pursuant to the
Regulatory Flexibility Act (RFA), we have prepared an Initial
Regulatory Flexibility Analysis (IRFA) of the possible significant
economic impact on small entities of the policies and actions
considered in this NPRM. The Commission prepared an IRFA to accompany
the first Further Notice of Proposed Rulemaking in this docket, USF/ICC
Transformation FNPRM. The questions asked in this NPRM are different
than those the Commission sought comment on previously. Therefore, we
have prepared a new IRFA to reflect the substance of this NPRM. The
text of the IRFA is set forth in section V of this document. Written
public comments are requested on this IRFA. Comments must be identified
as responses to the IRFA and must be filed by the deadlines for
comments on the NPRM. The Commission's Consumer and Governmental
Affairs Bureau, Reference Information Center, will send a copy of the
NPRM, including the IRFA, to the Chief Counsel for Advocacy of the
Small Business Administration.
40. Contact Person. For further information about this proceeding,
please contact Edward Krachmer, FCC Wireline Competition Bureau,
Pricing Policy Division, Room 5-A230, 445 12th Street SW, Washington,
DC 20554, (202) 418-1525, [email protected].
V. Initial Regulatory Flexibility Analysis
41. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), we have prepared this Initial Regulatory Flexibility
Analysis (IRFA) of the possible significant economic impact on a
substantial number of small entities by the policies and rules proposed
in this Notice of Proposed Rulemaking (NPRM). We request written public
comments on this IRFA. Comments must be identified as responses to the
IRFA and must be filed by the deadlines for comments provided on the
first page of the NPRM. We will send a copy of the NPRM, including this
IRFA, to the Chief Counsel for Advocacy of the Small Business
Administration (SBA). In addition, the NPRM and IRFA (or summaries
thereof) will be published in the Federal Register.
A. Need for, and Objective of, the Proposed Rules
42. In the USF/ICC Transformation FNPRM, the Commission sought
comment on additional steps to implement the bill-and-keep regime as
well as possible communications network definitional changes, the
appropriate recovery mechanisms going forward and VoIP and IP-to-IP
related intercarrier compensation issues. In this NPRM we propose to
adopt rules to address access arbitrage schemes that persist despite
previous Commission action. We propose to adopt rules to give access-
stimulating LECs two choices about how they connect to IXCs. First, an
access-stimulating LEC can choose to be financially responsible for
calls delivered to its networks so it, rather than IXCs, pays for the
delivery of calls to its end office or the functional equivalent. Or,
second, instead of accepting this financial responsibility, an access-
stimulating LEC can choose to accept direct connections from either the
IXC or an intermediate access provider of the IXC's choosing. In the
alternative, we seek comment on moving all traffic bound for an access-
stimulating LEC to bill-and-keep. The NPRM also seeks comment on
potential revisions to the definition of access stimulation, in
particular to address intermediate access providers. The record in this
proceeding suggests additional access arbitrage activities are
occurring, including: (1) Use of intermediate access providers by
Commercial Mobile Radio Carriers; (2) mileage pumping; and (3) daisy
chaining. Comment is sought on how best to address these activities.
The
[[Page 30635]]
NPRM seeks comment on the costs and benefits of these proposals.
B. Legal Basis
43. The legal basis for any action that may be taken pursuant to
this NPRM is contained in sections 1, 2, 4(i), 201-206, 214, 218-220,
251, 252, 254, 256, 303(r), and 403 of the Communications Act of 1934,
as amended, 47 U.S.C. 151, 152, 154(i), 201-206, 214, 218-220, 251,
252, 254, 256, 303(r), and 403.
C. Description and Estimate of the Number of Small Entities to Which
the Proposed Rules Will Apply
44. The RFA directs agencies to provide a description of, and where
feasible, an estimate of the number of small entities that may be
affected by the proposed rule revisions, if adopted. The RFA generally
defines the term ``small entity'' as having the same meaning as the
terms ``small business,'' ``small organization,'' and ``small
governmental jurisdiction.'' In addition, the term ``small business''
has the same meaning as the term ``small-business concern'' under the
Small Business Act. A ``small-business concern'' is one which: (1) Is
independently owned and operated; (2) is not dominant in its field of
operation; and (3) satisfies any additional criteria established by the
SBA.
45. Small Businesses, Small Organizations, Small Governmental
Jurisdictions. Our actions, over time, may affect small entities that
are not easily categorized at present. We therefore describe here, at
the outset, three comprehensive small entity size standards that could
be directly affected herein. First, while there are industry specific
size standards for small businesses that are used in the regulatory
flexibility analysis, according to data from the SBA's Office of
Advocacy, in general a small business is an independent business having
fewer than 500 employees. These types of small businesses represent
99.9% of all businesses in the United States which translates to 28.8
million businesses. Next, the type of small entity described as a
``small organization'' is generally ``any not-for-profit enterprise
which is independently owned and operated and is not dominant in its
field.'' Nationwide, as of August 2016, there were approximately
356,494 small organizations based on registration and tax data filed by
nonprofits with the Internal Revenue Service (IRS). Finally, the small
entity described as a ``small governmental jurisdiction'' is defined
generally as ``governments of cities, towns, townships, villages,
school districts, or special districts, with a population of less than
fifty thousand.'' U.S. Census Bureau data from the 2012 Census of
Governments indicate that there were 90,056 local governmental
jurisdictions consisting of general purpose governments and special
purpose governments in the United States. Of this number there were 37,
132 General purpose governments (county, municipal and town or
township) with populations of less than 50,000 and 12,184 Special
purpose governments (independent school districts and special
districts) with populations of less than 50,000. The 2012 U.S. Census
Bureau data for most types of governments in the local government
category show that the majority of these governments have populations
of less than 50,000. Based on this data we estimate that at least
49,316 local government jurisdictions fall in the category of ``small
governmental jurisdictions.''
46. Wired Telecommunications Carriers. The U.S. Census Bureau
defines this industry as ``establishments primarily engaged in
operating and/or providing access to transmission facilities and
infrastructure that they own and/or lease for the transmission of
voice, data, text, sound, and video using wired communications
networks. Transmission facilities may be based on a single technology
or a combination of technologies. Establishments in this industry use
the wired telecommunications network facilities that they operate to
provide a variety of services, such as wired telephony services,
including VoIP services, wired (cable) audio and video programming
distribution, and wired broadband internet services. By exception,
establishments providing satellite television distribution services
using facilities and infrastructure that they operate are included in
this industry.'' The SBA has developed a small business size standard
for Wired Telecommunications Carriers, which consists of all such
companies having 1,500 or fewer employees. Census data for 2012 show
that there were 3,117 firms that operated that year. Of this total,
3,083 operated with fewer than 1,000 employees. Thus, under this size
standard, the majority of firms in this industry can be considered
small.
47. Local Exchange Carriers (LECs). Neither the Commission nor the
SBA has developed a size standard for small businesses specifically
applicable to local exchange services. The closest applicable NAICS
Code category is Wired Telecommunications Carriers and under the
applicable SBA size standard, such a business is small if it has 1,500
or fewer employees. U.S. Census data for 2012 show that there were
3,117 firms that operated that year. Of that total, 3,083 operated with
fewer than 1,000 employees. Thus under this category and the associated
size standard, the Commission estimates that the majority of local
exchange carriers are small entities.
48. Incumbent LECs. Neither the Commission nor the SBA has
developed a small business size standard specifically for incumbent
local exchange services. The closest applicable NAICS Code category is
Wired Telecommunications Carriers as defined above. Under that size
standard, such a business is small if it has 1,500 or fewer employees.
According to Commission data, 3,117 firms operated in that year. Of
this total, 3,083 operated with fewer than 1,000 employees.
Consequently, the Commission estimates that most providers of incumbent
local exchange service are small businesses that may be affected by the
rules and policies adopted. Three hundred and seven (307) Incumbent
Local Exchange Carriers reported that they were incumbent local
exchange service providers. Of this total, an estimated 1,006 have
1,500 or fewer employees.
49. Competitive Local Exchange Carriers (Competitive LECs),
Competitive Access Providers (CAPs), Shared-Tenant Service Providers,
and Other Local Service Providers. Neither the Commission nor the SBA
has developed a small business size standard specifically for these
service providers. The appropriate NAICS Code category is Wired
Telecommunications Carriers, as defined above. Under that size
standard, such a business is small if it has 1,500 or fewer employees.
U.S. Census data for 2012 indicate that 3,117 firms operated during
that year. Of that number, 3,083 operated with fewer than 1,000
employees. Based on this data, the Commission concludes that the
majority of Competitive LECS, CAPs, Shared-Tenant Service Providers,
and Other Local Service Providers, are small entities. According to
Commission data, 1,442 carriers reported that they were engaged in the
provision of either competitive local exchange services or competitive
access provider services. Of these 1,442 carriers, an estimated 1,256
have 1,500 or fewer employees. In addition, 17 carriers have reported
that they are Shared-Tenant Service Providers, and all 17 are estimated
to have 1,500 or fewer employees. Also, 72 carriers have reported that
they are Other Local Service Providers. Of this total, 70 have 1,500 or
fewer employees. Consequently, based on internally researched FCC data,
the Commission
[[Page 30636]]
estimates that most providers of competitive local exchange service,
competitive access providers, Shared-Tenant Service Providers, and
Other Local Service Providers are small entities.
50. We have included small incumbent LECs in this present RFA
analysis. As noted above, a ``small business'' under the RFA is one
that, inter alia, meets the pertinent small business size standard
(e.g., a telephone communications business having 1,500 or fewer
employees), and ``is not dominant in its field of operation.'' The
SBA's Office of Advocacy contends that, for RFA purposes, small
incumbent LECs are not dominant in their field of operation because any
such dominance is not ``national'' in scope. We have therefore included
small incumbent LECs in this RFA analysis, although we emphasize that
this RFA action has no effect on Commission analyses and determinations
in other, non-RFA contexts.
51. Interexchange Carriers (IXCs). Neither the Commission nor the
SBA has developed a definition for Interexchange Carriers. The closest
NAICS Code category is Wired Telecommunications Carriers as defined
above. The applicable size standard under SBA rules is that such a
business is small if it has 1,500 or fewer employees. U.S. Census data
for 2012 indicates that 3,117 firms operated during that year. Of that
number, 3,083 operated with fewer than 1,000 employees. According to
internally developed Commission data, 359 companies reported that their
primary telecommunications service activity was the provision of
interexchange services. Of this total, an estimated 317 have 1,500 or
fewer employees. Consequently, the Commission estimates that the
majority of IXCs are small entities.
52. Local Resellers. The SBA has developed a small business size
standard for the category of Telecommunications Resellers. The
Telecommunications Resellers industry comprises establishments engaged
in purchasing access and network capacity from owners and operators of
telecommunications networks and reselling wired and wireless
telecommunications services (except satellite) to businesses and
households. Establishments in this industry resell telecommunications;
they do not operate transmission facilities and infrastructure. Mobile
virtual network operators (MVNOs) are included in this industry. Under
that size standard, such a business is small if it has 1,500 or fewer
employees. Census data for 2012 show that 1,341 firms provided resale
services during that year. Of that number, all operated with fewer than
1,000 employees. Thus, under this category and the associated small
business size standard, the majority of these resellers can be
considered small entities.
53. Toll Resellers. The Commission has not developed a definition
for Toll Resellers. The closest NAICS Code Category is
Telecommunications Resellers. The Telecommunications Resellers industry
comprises establishments engaged in purchasing access and network
capacity from owners and operators of telecommunications networks and
reselling wired and wireless telecommunications services (except
satellite) to businesses and households. Establishments in this
industry resell telecommunications; they do not operate transmission
facilities and infrastructure. Mobile virtual network operators (MVNOs)
are included in this industry. The SBA has developed a small business
size standard for the category of Telecommunications Resellers. Under
that size standard, such a business is small if it has 1,500 or fewer
employees. Census data for 2012 show that 1,341 firms provided resale
services during that year. Of that number, 1,341 operated with fewer
than 1,000 employees. Thus, under this category and the associated
small business size standard, the majority of these resellers can be
considered small entities. According to Commission data, 881 carriers
have reported that they are engaged in the provision of toll resale
services. Of this total, an estimated 857 have 1,500 or fewer
employees. Consequently, the Commission estimates that the majority of
toll resellers are small entities.
54. Other Toll Carriers. Neither the Commission nor the SBA has
developed a definition for small businesses specifically applicable to
Other Toll Carriers. This category includes toll carriers that do not
fall within the categories of interexchange carriers, operator service
providers, prepaid calling card providers, satellite service carriers,
or toll resellers. The closest applicable NAICS Code category is for
Wired Telecommunications Carriers as defined above. Under the
applicable SBA size standard, such a business is small if it has 1,500
or fewer employees. Census data for 2012 shows that there were 3,117
firms that operated that year. Of this total, 3,083 operated with fewer
than 1,000 employees. Thus, under this category and the associated
small business size standard, the majority of Other Toll Carriers can
be considered small. According to internally developed Commission data,
284 companies reported that their primary telecommunications service
activity was the provision of other toll carriage. Of these, an
estimated 279 have 1,500 or fewer employees. Consequently, the
Commission estimates that most Other Toll Carriers are small entities.
55. Prepaid Calling Card Providers. The SBA has developed a
definition for small businesses within the category of
Telecommunications Resellers. Under that SBA definition, such a
business is small if it has 1,500 or fewer employees. According to the
Commission's Form 499 Filer Database, 500 companies reported that they
were engaged in the provision of prepaid calling cards. The Commission
does not have data regarding how many of these 500 companies have 1,500
or fewer employees. Consequently, the Commission estimates that there
are 500 or fewer prepaid calling card providers that may be affected by
the rules.
56. Wireless Telecommunications Carriers (except Satellite). This
industry comprises establishments engaged in operating and maintaining
switching and transmission facilities to provide communications via the
airwaves. Establishments in this industry have spectrum licenses and
provide services using that spectrum, such as cellular services, paging
services, wireless internet access, and wireless video services. The
appropriate size standard under SBA rules is that such a business is
small if it has 1,500 or fewer employees. For this industry, U.S.
Census data for 2012 show that there were 967 firms that operated for
the entire year. Of this total, 955 firms had employment of 999 or
fewer employees and 12 had employment of 1000 employees or more. Thus
under this category and the associated size standard, the Commission
estimates that the majority of wireless telecommunications carriers
(except satellite) are small entities.
57. The Commission's own data--available in its Universal Licensing
System--indicate that, as of October 25, 2016, there are 280 Cellular
licensees that may be affected by our actions today. The Commission
does not know how many of these licensees are small, as the Commission
does not collect that information for these types of entities.
Similarly, according to internally developed Commission data, 413
carriers reported that they were engaged in the provision of wireless
telephony, including cellular service, Personal Communications Service,
and Specialized Mobile Radio Telephony services. Of this total, an
estimated 261
[[Page 30637]]
have 1,500 or fewer employees, and 152 have more than 1,500 employees.
Thus, using available data, we estimate that the majority of wireless
firms can be considered small.
58. Wireless Communications Services. This service can be used for
fixed, mobile, radiolocation, and digital audio broadcasting satellite
uses. The Commission defined ``small business'' for the wireless
communications services (WCS) auction as an entity with average gross
revenues of $40 million for each of the three preceding years, and a
``very small business'' as an entity with average gross revenues of $15
million for each of the three preceding years. The SBA has approved
these definitions.
59. Wireless Telephony. Wireless telephony includes cellular,
personal communications services, and specialized mobile radio
telephony carriers. As noted, the SBA has developed a small business
size standard for Wireless Telecommunications Carriers (except
Satellite). Under the SBA small business size standard, a business is
small if it has 1,500 or fewer employees. According to Commission data,
413 carriers reported that they were engaged in wireless telephony. Of
these, an estimated 261 have 1,500 or fewer employees and 152 have more
than 1,500 employees. Therefore, a little less than one third of these
entities can be considered small.
60. Cable and Other Subscription Programming. This industry
comprises establishments primarily engaged in operating studios and
facilities for the broadcasting of programs on a subscription or fee
basis. The broadcast programming is typically narrowcast in nature
(e.g., limited format, such as news, sports, education, or youth-
oriented). These establishments produce programming in their own
facilities or acquire programming from external sources. The
programming material is usually delivered to a third party, such as
cable systems or direct-to-home satellite systems, for transmission to
viewers. The SBA has established a size standard for this industry
stating that a business in this industry is small if it has 1,500 or
fewer employees. The 2012 Economic Census indicates that 367 firms were
operational for that entire year. Of this total, 357 operated with less
than 1,000 employees. Accordingly we conclude that a substantial
majority of firms in this industry are small under the applicable SBA
size standard.
61. Cable Companies and Systems (Rate Regulation). The Commission
has developed its own small business size standards for the purpose of
cable rate regulation. Under the Commission's rules, a ``small cable
company'' is one serving 400,000 or fewer subscribers nationwide.
Industry data indicate that there are currently 4,600 active cable
systems in the United States. Of this total, all but eleven cable
operators nationwide are small under the 400,000-subscriber size
standard. In addition, under the Commission's rate regulation rules, a
``small system'' is a cable system serving 15,000 or fewer subscribers.
Current Commission records show 4,600 cable systems nationwide. Of this
total, 3,900 cable systems have fewer than 15,000 subscribers, and 700
systems have 15,000 or more subscribers, based on the same records.
Thus, under this standard as well, we estimate that most cable systems
are small entities.
62. Cable System Operators (Telecom Act Standard). The
Communications Act also contains a size standard for small cable system
operators, which is ``a cable operator that, directly or through an
affiliate, serves in the aggregate fewer than 1 percent of all
subscribers in the United States and is not affiliated with any entity
or entities whose gross annual revenues in the aggregate exceed
$250,000,000.'' There are approximately 52,403,705 cable video
subscribers in the United States today. Accordingly, an operator
serving fewer than 524,037 subscribers shall be deemed a small operator
if its annual revenues, when combined with the total annual revenues of
all its affiliates, do not exceed $250 million in the aggregate. Based
on available data, we find that all but nine incumbent cable operators
are small entities under this size standard. We note that the
Commission neither requests nor collects information on whether cable
system operators are affiliated with entities whose gross annual
revenues exceed $250 million. Although it seems certain that some of
these cable system operators are affiliated with entities whose gross
annual revenues exceed $250 million, we are unable at this time to
estimate with greater precision the number of cable system operators
that would qualify as small cable operators under the definition in the
Communications Act.
63. All Other Telecommunications. The ``All Other
Telecommunications'' industry is comprised of establishments that are
primarily engaged in providing specialized telecommunications services,
such as satellite tracking, communications telemetry, and radar station
operation. This industry also includes establishments primarily engaged
in providing satellite terminal stations and associated facilities
connected with one or more terrestrial systems and capable of
transmitting telecommunications to, and receiving telecommunications
from, satellite systems. Establishments providing internet services or
voice over internet protocol (VoIP) services via client-supplied
telecommunications connections are also included in this industry. The
SBA has developed a small business size standard for ``All Other
Telecommunications,'' which consists of all such firms with gross
annual receipts of $32.5 million or less. For this category, U.S.
Census data for 2012 show that there were 1,442 firms that operated for
the entire year. Of these firms, a total of 1,400 had gross annual
receipts of less than $25 million. Thus a majority of ``All Other
Telecommunications'' firms potentially may be affected by our action
can be considered small.
D. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements for Small Entities
64. The NPRM proposes and seeks comment on rule changes that will
affect LECs and intermediate access providers, including CEA providers.
The NPRM proposes rules to further limit or eliminate the occurrence of
access arbitrage, including access stimulation, which could reduce
potential reporting requirements. One possible result of the proposed
rules would be greater availability of direct connections between IXCs
and access-stimulating LECs to avoid the use of intervening third
parties, including CEA providers, and thus create more efficient and
economical network connections. Direct connections would also likely
reduce recordkeeping requirements. Specifically, we propose amending
our rules to allow access-stimulating LECs to choose either to be
financially responsible for the delivery of calls to their networks or
to accept direct connections from IXCs or from intermediate access
providers of the IXC's choosing. The proposed rules also contain
notification requirements for access-stimulating LECs, which may impact
small entities. Some of these requirements may also involve tariff
changes.
65. The NPRM also seeks comment on other actions the Commission
could take to further discourage or eliminate access arbitrage
activity. Rules which achieve these objectives could potentially affect
recordkeeping and reporting requirements.
[[Page 30638]]
E. Steps Taken To Minimize the Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
66. The RFA requires an agency to describe any significant,
specifically small business, alternatives that it has considered in
reaching its proposed approach, which may include the following four
alternatives (among others): (1) The establishment of differing
compliance or reporting requirements or timetables that take into
account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance and
reporting requirements under the rules for such small entities; (3) the
use of performance rather than design standards; and (4) an exemption
from coverage of the rule, or any part thereof, for such small
entities.
67. This NPRM invites comment on a number of proposals and
alternatives to modify or adopt access arbitrage rules and on the
legality of access stimulation generally. The Commission has found
these arbitrage practices inefficient and to ultimately increase
consumer telecommunications rates. The NPRM proposes rules to further
limit or eliminate the occurrence of access stimulation as well as
other access arbitrage in turn promoting the efficient function of the
nation's telecommunications network. We believe that if companies are
able to operate with greater efficiency this will benefit the
communications network as a whole, and its users, by allowing companies
to increase their investment in broadband deployment. Thus, we propose
to adopt rules to give access-stimulating LECs two choices about how
they connect to IXCs. First, an access-stimulating LEC can choose to be
financially responsible for calls delivered to its networks so it,
rather than IXCs, pays for the delivery of calls to its end office or
the functional equivalent. Or, second, instead of accepting this
financial responsibility, an access-stimulating LEC can choose to
accept direct connections from either the IXC or an intermediate access
provider of the IXC's choosing. In the alternative, we seek comment on
moving all traffic bound for an access-stimulating LEC to bill-and-
keep. The NPRM also seeks comment on potential revisions to the
definition of access stimulation, in particular to address intermediate
access providers. The record in this proceeding suggests additional
access arbitrage activities are occurring, including: (1) Use of
intermediate access providers by Commercial Mobile Radio Carriers; (2)
mileage pumping; and (3) daisy chaining. Comment is sought on how best
to address these activities. The NPRM seeks comment on the costs and
benefits of these proposals. Providing carriers, especially small
carriers, with options will enable them to best assess the financial
effects on their operation allowing them to determine how best to
respond.
68. The NPRM also seeks comment on other actions we can take to
further discourage or eliminate access arbitrage activity. Comment is
sought on alternatives to our proposal that could be considered to
achieve our objectives with potentially less impact on small entities.
F. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
69. None.
VI. Ordering Clauses
70. Accordingly, it is ordered that, pursuant to sections 1, 2,
4(i), 201-206, 214, 218-220, 251, 252, 254, 256, 303(r), and 403 of the
Communications Act of 1934, as amended, and section 706 of the
Telecommunications Act of 1996, 47 U.S.C. 151, 152, 154(i), 201-206,
218-220, 251, 252, 254, 256, 303(r), and 403, and Sec. 1.1 of the
Commission's rules, 47 CFR 1.1, this Notice of Proposed Rulemaking is
adopted.
71. It is further ordered that pursuant to applicable procedures
set forth in Sec. Sec. 1.415 and 1.419 of the Commission's rules, 47
CFR 1.415, 1.419, interested parties may file comments on this Notice
of Proposed Rulemaking on or before July 20, 2018 and reply comments on
or before August 3, 2018.
72. It is further ordered that the Commission's Consumer and
Governmental Affairs Bureau, Reference Information Center, shall send a
copy of the Notice of Proposed Rulemaking, including the Initial
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of
the Small Business Administration.
List of Subjects in 47 CFR Part 51
Common carriers, Communications.
Federal Communications Commission.
Marlene Dortch,
Secretary, Office of the Secretary.
Proposed Rules
For the reasons discussed in the preamble, the Federal
Communications Commission proposes to amend 47 CFR part 51 as follows:
PART 51--INTERCONNECTION
0
1. The authority citation for part 51 continues to read as follows:
Authority: 47 U.S.C. 151-55, 201-05, 207-09, 218, 220, 225-27,
251-54, 256, 271, 303(r), 332, 1302.
0
2. Amend Sec. 51.903 by adding paragraphs (k), (l), and (m) to read as
follows:
Sec. 51.903 Definitions.
* * * * *
(k) Access Stimulation has the same meaning as that term is defined
in Sec. 61.3(bbb) of this chapter.
(l) Intermediate Access Provider means any entity that carries or
processes traffic at any point between the final Interexchange Carrier
in a call path and the carrier providing End Office Access Service.
(m) Interexchange Carrier means a telecommunications carrier that
uses the exchange access or information access services of another
telecommunications carrier for the provision of telecommunications.
0
3. Add Sec. 51.914 to read as follows:
Sec. 51.914 Additional provisions applicable to Access Stimulation
traffic.
(a) Notwithstanding any other provision of the Commission's rules,
if a local exchange carrier is engaged in Access Stimulation, it shall
within 45 days of commencing Access Stimulation, or by [date 45 days
after the effective date of the final rule], whichever is later:
(1)(i) Not bill any affected Interexchange Carrier or any
Intermediate Access Provider for the terminating switched access tandem
switching or any terminating switched access transport charges for any
traffic between such local exchange carrier's terminating end office or
equivalent and the associated access tandem switch; and
(ii) Assume financial responsibility for the applicable
Intermediate Access Provider terminating tandem switching and
terminating switched transport access charges relating to traffic bound
for the access-stimulating local exchange carrier; or
(2) Upon request of an Interexchange Carrier for direct-trunked
transport service, provision and enable direct-trunked transport
service to either the Interexchange Carrier or an Intermediate Access
Provider of the Interexchange Carrier's choosing within [period of time
to be determined] of such a request.
(b) Notwithstanding any other provision of the Commission's rules,
if a local exchange carrier is engaged in
[[Page 30639]]
Access Stimulation, it shall within 45 days of commencing Access
Stimulation, or by [date 45 days after effective date of the final
rule], whichever is later, notify in writing all Intermediate Access
Providers which it subtends and Interexchange Carriers with which it
does business of the following:
(1) That it is a local exchange carrier engaged in Access
Stimulation;
(2) That it will either:
(i) Obtain and pay for terminating access services from
Intermediate Access Providers for such traffic as of that date; or
(ii) Offer direct-trunked transport service to any affected
Interexchange Carrier (or to an Intermediate Access Provider of the
Interexchange Carrier's choosing); and
(3) To the extent that the local exchange carrier engaged in Access
Stimulation intends to comply with paragraph (a) of this section
through electing the option described in paragraph (a)(2) of this
section, designate where on its network it will accept the requested
direct connection.
(c) Nothing in this section creates an independent obligation for a
local exchange carrier to construct new facilities other than, as
necessary, adding switch trunk ports.
(d) In the event that an Intermediate Access Provider receives
notice under paragraph (b) of this section that a local exchange
carrier engaged in Access Stimulation will be obtaining and paying for
terminating access service from such Intermediate Access Provider, an
Intermediate Access Provider shall not bill Interexchange Carriers
terminating tandem switching and terminating switched transport access
for traffic bound for such local exchange carrier but, instead bill
such local exchange carrier for such services.
(e) Notwithstanding any provision of this section, any carrier that
is not itself engaged in Access Stimulation, as that term is defined in
Sec. 61.3(bbb) of this chapter, but serves as an Intermediate Access
Provider with respect to traffic bound for an access-stimulating local
exchange carrier, shall not itself be deemed a local exchange carrier
engaged in Access Stimulation or be affected by this rule other than
paragraph (d) of this section.
0
4. Amend Sec. 51.917 by revising paragraph (c) to read as follows:
Sec. 51.917 Revenue recovery for Rate-of-Return Carriers.
* * * * *
(c) Adjustment for Access Stimulation activity. 2011 Rate-of-Return
Carrier Base Period Revenue shall be adjusted to reflect the removal of
any increases in revenue requirement or revenues resulting from Access
Stimulation activity the Rate-of-Return Carrier engaged in during the
relevant measuring period. A Rate-of-Return Carrier should make this
adjustment for its initial July 1, 2012, tariff filing, but the
adjustment may result from a subsequent Commission or court ruling.
* * * * *
[FR Doc. 2018-13699 Filed 6-28-18; 8:45 am]
BILLING CODE 6712-01-P